Patterns and Dynamic Positioning of Pakistan’s Revealed Comparative Advantage in Services Trade

Abstract

Using bilateral trade data for 11 services categories, we examine the specialization patterns and dynamic positioning of Pakistan’s comparative advantage in bilateral services, with major trading partners, from year 2007 to 2014. We applied Balassa’s Revealed Comparative, Revealed Symmetric Comparative Advantage and Lafay’s Trade Balance indices to determine how trade as well as specialization patterns have changed over the time. In addition, Galtonian regression and kernel stochastic have been applied to analyze the structural stability of comparative advantages. The study finds out that specialization patterns have become more polarized in bilateral services trade with most of the trading partners. Besides, in some services sector, reversal of comparative advantage has been observed in bilateral trade. This is the first study which enables us to assess the export performance of Pakistani services sector.